How to Work a Crowd: Developing Crowd Capital Through Crowdsourcing
(2014)

Traditionally, the term ‘crowd’ was used almost exclusively in the context of people who selforganized around a common purpose, emotion, or experience. Today, however, firms often refer to crowds in discussions of how collections of individuals can be engaged for organizational purposes. Crowdsourcing–defined here as the use of information technologies to outsource business responsibilities to crowds–can now significantly influence a firm’s ability to leverage previously unattainable resources to build competitive advantage. Nonetheless, many managers are hesitant to consider crowdsourcing because they do not understand how its various types can add value to the firm. In response, we explain what crowdsourcing is, the advantages it offers, and how firms can pursue crowdsourcing. We begin by formulating a crowdsourcing typology and show how its four categories—crowd voting, micro-task, idea, and solution crowdsourcing—can help firms develop ‘crowd capital,’ an organizational-level resource harnessed from the crowd. We then present a three-step process model for generating crowd capital. Step one includes important considerations that shape how a crowd is to be constructed. Step two outlines the capabilities firms need to develop to acquire and assimilate resources (e.g., knowledge, labor, funds) from the crowd. Step three outlines key decision areas that executives need to address to effectively engage crowds. 1. Crowds and Crowdsourcing Not too long ago, the term ‘crowd’ was used almost exclusively in the context of people who selforganized around a common purpose, emotion, or experience. Crowds were sometimes seen as a positive occurrence– for instance, when they formed for political rallies or to support sports teams— but were more often associated negatively with riots, a mob mentality, or looting. Under today’s lens, they are viewed more positively (Wexler, 2011). Crowds have become useful! It all started in 2006, when crowdsourcing was introduced as ‘‘taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an “open call’’ (Howe, 2006, p. 1). The underlying concept of crowdsourcing, a combination of crowd and outsourcing, is that many hands make light work and that wisdom can be gleaned from crowds (Surowiecki, 2005) to overcome groupthink, leading to superior results (Majchrzak & Malhotra, 2013). Of course, such ambitions are not new, and organizations have long desired to make the most of dispersed knowledge whereby each individual has certain knowledge advantages over every other (Hayek, 1945). Though examples of using crowds to harness what is desired are abundant (for an interesting application, see Table 1), until recently, accessing and harnessing such resources at scale has been nearly impossible for organizations. Due in large part to the proliferation of the Internet, mobile technologies, and the recent explosion of social media (Kietzmann, Hermkens, McCarthy, & Silvestre, 2011), organizations today are in a much better position to engage distributed crowds (Lakhani & Panetta, 2007) of individuals for their innovation and problem-solving needs (Afuah & Tucci, 2012; Boudreau & Lakhani, 2013). As a result, more and more executives–—from small startups to Fortune 500 companies alike–— are trying to figure out what crowdsourcing really is, the benefits it can offer, and the processes they should follow to engage a crowd. In this formative stage of crowdsourcing, multiple streams of academic and practitioner-based literature–—each using their own language–—are developing independently of one another, without a unifying framework to understand the burgeoning phenomenon of crowd engagement. For executives who would like to explore crowdbased opportunities, this presents a multitude of options and possibilities, but also difficulties. One problem entails lack of a clear understanding of crowds , the various forms they can take, and the value they can offer. Another problem entails absence of a well-defined process to engage crowds. As a result, many executives are unable to develop strategies or are hesitant to allocate resources to crowdsourcing, resulting in missed opportunities for new competitive advantages resulting from engaging crowds. To help provide clarity, we submit an overview of the different types of crowdsourcing. Then we introduce the crowd capital framework, supplying a systematic template for executives to recognize the value of information from crowds, therein mapping the steps to acquire and assimilate resources from crowds. Finally, we discuss the unique benefits that can be gained from crowds before concluding with some advice on how to best ‘work a crowd.’ 2. Types of crowdsourcing Crowdsourcing as an online, distributed problemsolving model (Brabham, 2008) suggests that approaching crowds and asking for contributions can help organizations develop solutions to a variety of business challenges. In this context, the crowd is often treated as a single construct: a general collection of people that can be targeted by firms. However, just as organizations and their problems vary, so do the types of crowds and the different kinds of contributions they can offer the firm. The following typology of crowdsourcing suggests that managers can begin by identifying a business problem and then working outward from there, considering (1) what type of contributions are required from members of the crowd and (2) how these contributions will collectively help find a solution to their business problem. First, the types of contributions required from the crowd could either call for specific objective contributions or for subjective content. Specific objective contributions help to achieve an impartial and unbiased result; here, bare facts matter and crowds can help find or create them. Subjective content contributions revolve around the judgments, opinions, perceptions, and beliefs of individuals in a crowd that are sought to collectively help solve a problem that calls for a subjective result. Second, contributions need to be processed collectively to add value. Depending on the problem to be solved, the contributions must either be aggregated or filtered. Under aggregation, contributions collectively yield value when they are simply combined at face value to inform a decision, without requiring any prior validation. For instance, political elections call for people to express their choices via electoral ballots, which are then tallied to calculate the sums and averages of their collective preferences; the reasons for their choices are not important at this stage. Other problems, however, are more complex and call for crowd contributions to be qualitatively evaluated and filtered before being considered on their relative merits (e.g., when politicians invite constituents’ opinions before campaigning). Together, these two dimensions help executives distinguish among and understand the variety of crowdsourcing alternatives that exist today (see Figure 1). Two forms of crowdsourcing rely on aggregation as the primary process: crowd voting and microtask crowdsourcing. In crowd voting, organizations pose an issue to a crowd and aggregate the subjective responses derived from crowd participants to make a decision. Consider the popular television show American Idol, which allows viewers to support their preferred contestants by submitting votes online or via telephone or text. These votes are tallied at the end of the show and contestants with the fewest votes are eliminated from the competition. Similarly, so-called prediction markets (Arrow et al., 2008) activate the wisdom of the crowd through crowd voting. But rather than simply adding up votes, these markets arrive at specific predictions that can exceed the accuracy of experts by averaging the independent responses of crowd participants. For instance, Starwood Hotels and Resorts utilized an internal prediction market by asking a crowd of its own employees to select the best choice among a variety of potential marketing campaigns (Barlow, 2008). In micro-task crowdsourcing, organizations engage a crowd to undertake work that is often unachievable through standard procedures due to its sheer size or complexity. An organization may need to assemble a large data set, have numerous photos labeled and tagged, translate documents, or transcribe audio transcripts. Breaking such work into micro-tasks (Gino & Staats, 2012) allows daunting undertakings to be completed more quickly, cheaply, and efficiently. Consider how Google uses reCAPTCHA (von Ahn, Maurer, McMillen, Abraham, & Blum, 2008) and the little–—and admittedly annoying–—dialogue boxes that ask users to enter the text snippets they see of distorted images onscreen. It is commonly believed that this web utility is only for authenticating human users, thus keeping websites from spambots. However, every time the task of entering characters is completed, individuals are actually digitizing what optical character recognition (OCR) software has been unable to read. In this way, micro-task crowdsourcing is helping to digitize the archives of The New York Times and moving old manuscripts into Google Books. Similarly, crowdfunding (Stemler, 2013) endeavors are a form of micro-task crowdsourcing whereby an overall highly ambitious financial goal is broken into smaller funding tasks and contributions consist of objective resources (herein ‘funds’) that are simply aggregated for each venture. Figure 1. Crowdsourcing alternatives Whether objective or subjective, crowdsourced contributions must be processed to be valuable. In idea crowdsourcing, organizations seek creativity from a crowd, hoping to leverage its diversity to generate unique solutions to problems/issues. An organization may receive many ideas from a crowd, which it will need to filter before one or more can be implemented. For instance, online artist community and e-comm